Those were the words of Fed Chair Powell over the weekend. He mostly sees the economy going from strength to strength and cites a resurgent spread of the virus as the biggest risk. It's difficult to argue with that narrative when we look at the recent data - unemployment has been steadily falling with US jobs growing faster than expected.
On inflation, the yield curve got significantly steeper over Q1 this year with the 10Y yield now trading close to the 1.7% level. Markets have not lost sight of this either - SPX is making record highs by closing above 4100 now. Once it broke the 4k level in the prior week, it has not yet threatened to dip back below the threshold. US Secretary of State Anthony Blinken used a speech over the weekend to go after China once again, asking it to cease intimidating Taiwan and criticizing the pace of information sharing over the pandemic. Chinese equities didn't have much to cheer last week and a record USD 2.8 bio fine on Alibaba over the weekend (antitrust violations) will not help the case.The recent action against Jack Ma seems almost personal with authorities also shutting down the 2021 intake of a popular business school that Ma had started 6 years ago. It does indicate that the powers that be are wary of his growing influence and prioritize checking that over an adverse market reaction. On the vaccine front, Australia has scrapped its year-end target to vaccinate the entire population over blood clot concerns from the AstraZeneca vaccine. The UK saw daily cases dip below the 2.5k mark and eases more restrictions today. Despite India claiming to have vaccinated 100 mn people in just 85 days, daily cases in the country continued to rise to 150k now. Indian exchanges are also closed on Tue and Wed this week.
April 12, 2021
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